Story ID: 704 0CA LuxaviationExecuJet
Luxaviation Goes Global with ExecuJet Acquisition
By: Charles Alcock
Caption: Luxaviation today acquired ExecuJet Aviation, almost tripling the size of its group.
Word Count: 1498
Luxaviation (Booth S123) marches into EBACE with a significantly larger footprint. Earlier this month, the fast-growing business aviation services group almost tripled its size when it acquired ExecuJet Aviation Group for an undisclosed sum. As has been the case with other acquisitions the Luxembourg-based company has made in recent years, Switzerland-based ExecuJet will continue to trade under its own name and under the leadership of its existing management team.

The deal makes Luxembourg-based Luxaviation one of the largest business aviation operators in the world, with a combined fleet of more than 250 aircraft. Before the takeover, Luxaviation had 520 employees in six European countries and a fleet of 85 aircraft. ExecuJet has a global workforce of almost 1,000 across Europe, Asia, Africa, Australasia, Latin America and the Middle East. Founded in 1991, it operates a diverse fleet of 165 aircraft, including a significant Global Express contingent and other Bombardier jets, along with Boeing Business Jets, Gulfstreams, Dassault Falcons and Pilatus PC-12 turboprop singles. It is active in aircraft management, charter, maintenance, and completions management, as well as operating a worldwide chain of FBOs.

Corporate Scorecard

In addition to the Luxaviation parent company, launched in 2008 by Edison Capital Partners founder Patrick Hansen (who is CEO), the group already includes Luxaviation Germany, Abelag (Belgium), Unijet (France), London Executive Aviation (UK) and Masterjet (Portugal). It also has a commercial office in Singapore.

ExecuJet will be led by its former president and COO Gerrit Basson, who now holds the title CEO. Hansen will serve as the company’s new chairman, replacing founding CEO and chairman Niall Olver, who will continue to support ExecuJet as an advisor.

“The acquisition of ExecuJet is the next step in our growth strategy and significantly increases Luxaviation’s global reach,” Hansen commented. “ExecuJet’s operations give us a strong presence in some of the world’s fastest-growing business aviation markets, including Asia, Latin America and the Middle East, as well as a significantly larger managed fleet.”

Olver has long been an advocate of consolidation in what he sees as an overly crowded business aviation market. With ExecuJet’s previous major shareholder, Irish financier Dermot Desmond, unwilling to make further significant investment in the group, Luxaviation made an offer to take over. 

No Changes for Customers

“I became convinced that Patrick Hansen has the vision to consolidate the industry, and ExecuJet has become the cornerstone of this process at Luxaviation,” Olver told AIN. “For our customers, nothing changes; they are still dealing with the same people, and the bigger platform [that ExecuJet is now part of] gives them a bigger network of services and will allow them to benefit from greater economies of scale.”

ExecuJet operates a chain of 19 FBOs around the world at the following locations: Bali (Indonesia), Barcelona, Ibiza, Gerona and Valencia in Spain, Berlin, Cambridge (UK), Dubai (two FBOs), Cape Town and Johannesburg in South Africa, Lagos (Nigeria), Wellington (New Zealand), Riyadh (Saudi Arabia), Melbourne (Australia), Istanbul (Turkey-two FBOs), Zurich and right here in Geneva. At 11 locations, the group also provides extensive maintenance support to operators of aircraft produced by Bombardier, Textron (Cessna Citations and Hawkers), Dassault, Embraer and Gulfstream. 

Growth Strategy

Even before the ExecuJet deal, Luxaviation had aggressively pursued a strategy of taking over existing executive air charter operators to accumulate a large flock. After acquiring London Executive Aviation (LEA) in 2014, it followed up with the takeover of Geneva-based Masterjet earlier this year. While looking for synergies, Luxaviation has remained keen on maintaining the individual brands of the operators it acquires, CEO Hansen told AIN. Through further acquisitions, Hansen is targeting a 500-strong fleet by 2019.

Luxaviation now comprises a total of seven European operating companies. Along with ExecuJet, there are Luxaviation, Luxaviation Germany, Abelag (Belgium), Unijet (France), LEA (UK) and Masterjet. It also has a commercial office in Singapore. The next to latest takeover, Masterjet, holds a Portuguese AOC but operates business jets from Paris Le Bourget. It has 44 employees in Paris and 13 aviation experts in Lisbon, operating a fleet of eight jets–Falcons, Learjets and an Airbus A320. “With the addition of the A320, we will be able to serve the ‘head of state’ market,” Hansen emphasized when the deal was announced in January.

It will continue its strategy of retaining the identity, leadership and operational independence of each operator within the group, while pooling many operational services, including fuel purchasing, maintenance and insurance. “The brands have their values,” Hansen said. He emphasized he wants neither to regroup the companies’ air operator certificates, nor to cut jobs. “We need as many people as possible, as organic growth is quite strong, and we know where we want to go,” he told AIN.

Procurement Synergies

Nevertheless, synergies can be found in procurement. “There is plenty of low-hanging fruit,” Hansen said. For example, the unit cost for insurance is lower with 250 aircraft than it is with 10. Another benefit is in shorter deadhead ferry flights, as dispatchers booking trips will seek out the closest suitable aircraft available within the group-wide fleet.

Hansen made it clear his business is rather about managing other people’s aircraft, as opposed to owning aircraft. “We only have one aircraft on order–an Embraer Phenom 300–for a specific charter need,” he said. And he is not willing to move to a more homogeneous fleet–which is usually considered as a strong point because it translates into lower maintenance costs. “We want to show as many owners as possible we have expertise in their aircraft type,” Hansen explained.

In future, pilots within the group should be able to replace each other when needed to fill in for a temporary vacancy. “The challenge lies in [rationalizing the] national interpretations of EASA rules,” Hansen noted.

Speaking about the European market, he anticipated stability in the near term, as overall growth over the past several years has been offset by “a strong downturn for flights from Moscow,” since 2014. The favorable trend for large-cabin business jets continues, he noted, but prices are stagnating. Prior to the ExecuJet acquisition, the Luxaviation group was logging a combined 25,000-30,000 flight hours per year.

Now that the work of merging ExecuJet’s and Luxaviation’s forces is complete, Olver indicated that he may focus his efforts on restarting the SPn light jet program, which was stalled by the August 2008 insolvency of Grob. He told AIN that, as owner of the SPn patents, he has been approached by new prospective partners. In his view advances in carbon fiber technology make the aircraft an even more compelling product now than in the past and he is “more confident we can meet market expectations.”

AirClub: A Different Approach to Expansion

AirClub has also set its sights on worldwide expansion, despite fierce competition that saw Luxaviation take over former AirClub operators LEA and Masterjet over the past two years. AirClub president Jurgen Van Campenhout told AIN he hoped to announce the addition of one or two new operators at EBACE.

One of them might be a second U.S.-based company. The first, Primejet, joined early in 2014. “We want to establish a network in the U.S.,” Van Campenhout said. With the ultimate goal of establishing global coverage, AirClub has appointed a vice-president responsible for the U.S. and Asia–Primejet’s Cheryl Janke. “Some of our members’ aircraft are already based in Singapore, Malaysia, Russia, Saudi Arabia and Chile,” Van Campenhout added.

A candidate for membership in AirClub has to meet a number of criteria. The first one is the safety record, according to Van Campenhout, followed by service quality, number or aircraft and bases–among others.

Currently, AirClub’s members include Air Alsie (Booth Y105), ACM, Air Hamburg (Booth O114), Flying Group, Globe Air, Prime Jet and PrivatAir. The combined fleet consists of 95 aircraft. These are mainly jets, from the Cessna Citation Bravo to the Boeing 757.

Synergies have emerged, such as negotiating lower prices with suppliers. Van Campenhout also mentioned volume pricing on catering. Regarding crew hotels, AirClub has been successful lowering prices, as well as negotiating favourable terms and conditions such as allowing late cancellations.

AirClub is happy with its online booking system, which it believes is the first of its kind in the industry. “It is working very well,” Van Campenhout said. For example, prospective clients can see a photo of the actual aircraft interior, as opposed to a generic picture of the model. The online payment feature, however, has had limited success. Van Campenhout estimates only about one payment per month has been made online since the system went live in the spring of 2014. “Few customers are ready to pay five-digit amounts online,” he said. He expressed hope that this is going to change over the next two to five years.